Impala Platinum Ltd. v. Impala Sales (U.S.A.), Inc.

• Decision Date: 19 July 1978
• Docket Number: No. 125,125
• Citation: 283 Md. 296,389 A.2d 887
• Parties: IMPALA PLATINUM LIMITED v. IMPALA SALES (U.S.A.), INC., et al.
• Court: Maryland Court of Appeals

Page 296

283 Md. 296

389 A.2d 887

IMPALA PLATINUM LIMITED v. IMPALA SALES (U.S.A.), INC., et al.

No. 125.

Court of Appeals of Maryland.

July 19, 1978.

Francis D. Murnaghan, Jr., Baltimore (Benjamin Rosenberg, Baltimore and Shearman & Sterling, New York City, on the brief), for appellant.

George W. McManus, Jr., Baltimore (S. Michael Floam, Baltimore and Daniel H. Bathon, Elkton, on the brief), for appellees.

Argued before SMITH, DIGGES, LEVINE, ELDRIDGE, ORTH and COLE, JJ.

ORTH, Judge.

STATEMENT OF THE CASE

This case began on 7 February 1975 with an action of Assumpsit filed in the Circuit Court for Cecil County by Impala Platinum Limited (Impala) against Impala Sales (U.S.A.), Inc. (Sales) to recover $730,141.18 for goods sold and delivered, namely platinum and platinum group metals, ¹ during the period 7 June 1974 to 26 January 1975, and the issuance of attachment on original process against Colonial Metals, Inc. (CMI). On 1 April 1977, after an eleven day trial before a jury, the case ended, as to the claim of Impala against Sales with the entry of a judgment n. o. v. in favor of Impala against Sales in the amount of $730,141.18 with interest, and, as to a counterclaim by CMI, with the entry of a judgment absolute in favor of CMI against Impala in the amount of $2,102,312. On 2 May 1977, it concluded as to the garnishee action with the entry of a judgment absolute against CMI, garnishee, in the amount of the judgment in favor of Impala against Sales with interest from 7 February 1975.

On 26 April 1977 the court issued an order pursuant to Maryland Rule 605, whereupon the parties noted appeals to the Court of Special Appeals. On 28 April Impala appealed "from that portion of the judgment . . . awarding the sum of $2,102,312.00 to (CMI) on its Counterclaim against Impala . . . , pursuant to the jury's verdicts on Counts I and V of the Counterclaim of (CMI) against Impala. . . ." On 29 April CMI appealed "from that portion of the Judgment . . . in favor of . . . Impala . . . against . . . (CMI) on Counts II, III, IV and VI of the Amended Counterclaim, which judgment was entered pursuant to the direction of the Lower Court." ² The same day Sales appealed "from that portion of the Judgment . . . awarding the sum of $730,141.68 with interest thereon . . . which Judgment was entered by reason of granting (Impala's) Motion for Judgment N.O.V. contrary to the Jury's verdict." On 2 May CMI, garnishee, noted an appeal from the judgment of condemnation absolute entered that day in the attachment portion of the case. We certified the case for review before decision by the intermediate appellate court. ³

THE FACTS

The underlying basis of the litigation is not disputed. Impala was formed in South Africa in 1967 to mine, refine and market platinum from a concession located in the territory of Bophutswana. Prices for dealer transactions in platinum fluctuated widely. Impala sought contracts of extended duration with fabricators and consumers other than dealers to establish set producer prices in order to provide greater stability and to enable more reasonable planning for future production quantity levels. It acquired the entire interest in Ayrton Metals, Ltd. (Ayrton), an established broker or dealer in metals with headquarters in London, which, prior to the acquisition, had been unaffiliated with any producer of metals and purchased and sold on the world market individual lots of metals wherever produced, and whether virgin or recovered metal. Through Ayrton, Impala negotiated some supply contracts with consumers in the United States, although, according to Impala, Ayrton continued to operate primarily as a dealer, buying and selling metal from many sources without direction from Impala. In 1971 Sales was formed as a 100% Subsidiary of Impala to give Impala "a presence in the United States." From its headquarters in New York City, Sales sought out ultimate consumers of platinum in the United States with whom to enter into contracts for the supply of Impala-produced platinum. Impala sold to Sales at a price 5% Below the producer price and Sales negotiated long-term contracts with consumers at the producer price. On 1 September 1972 Impala and Sales executed two contracts to assure to Sales the supply of the Impala-produced metals platinum and palladium (the Supply Contracts). The Supply Contracts set yearly limits on the amounts of the metals Impala was bound to supply and Sales was bound to order. There was an amendment in the middle of September with respect to the limits on the amount of metals. The two Supply Contracts contained substantially the same terms, covering, for example, the type of material, its purity, quantity and price, price protection, delivery, documents to be furnished, title and a prohibition against assignment of rights and obligations thereunder by one party without prior written consent of the other. Clause 10 required that payment in U.S.A. dollars be not later than 30 days after delivery. There were two provisions for termination. Clause 11, entitled "DURATION," provided:

"This agreement shall commence from August 1st, 1972 and shall be deemed to have been renewed automatically each year on the same terms and conditions, unless notice of termination is given by the one party to the other (Six) 6 calendar months prior to the expiry date."

Clause 16, entitled "BREACH OF CONTRACT," read:

"(a) Should either the SELLER or the BUYER commit a breach of any of the terms and conditions of this Agreement and fail to remedy such breach within (Fourteen) 14 days of receipt of written notice by the non-defaulting party calling upon the defaulting party to do so, the non-defaulting party shall be entitled to terminate this Agreement forthwith after the expiry of the said period of (Fourteen) 14 days. Termination shall not prejudice the non-defaulting party's rights under this Agreement to recover from the defaulting party any claim for damages for breach of contract or otherwise, but subject always to sub-clause (b) hereof.

"(b) No claim for consequential loss shall lie against the defaulting party for any breach of this Agreement."

CMI was a body corporate of this State with its principal place of business located in Elkton, Maryland. It was engaged in the sale of platinum both before and after processing. CMI had purchased platinum from Sales, which had sought to negotiate a supply contract with CMI, and from Ayrton and other dealers, on a dealer's price basis. By letter agreement dated 3 October 1972 from Impala and accepted by CMI (the Agreement), CMI acquired all of the stock of Sales upon transfer of 45% Of the stock of CMI to Impala. ⁴ Paragraphs 1, 2 and 4 dealt with the exchange of the stock and with who were to be the directors of Sales. Under paragraph 5 Sales continued to have the right to buy from Impala and Impala had the right to sell to Sales platinum "on the same terms as at present obtain." Impala reserved the right in paragraph 6 "to deal direct with companies engaged in the manufacture of automobiles in the U.S.A. who may require platinum or platinum group metals for the manufacture of catalytic converters for the control of exhaust emissions." Paragraph 7 "specifically recorded that (Impala's) subsidiary and agent in the United Kingdom, Ayrton . . ., has certain contractual obligations with various consumers in the United States of America and these will continue undisturbed by the arrangements set out above and neither (CMI) nor Sales . . . will have any entitlement to commission or other interest in respect of such sales. A list of these customers will be furnished." The list was furnished in a letter from Impala to CMI under date of 1 November 1972. It designated fourteen companies and specified the metal sold to each of them. Paragraph 8 read:

"Subject to the provisos in Paragraphs 6 and 7 above, the intention of (CMI) and Impala . . . is that all further sales of platinum and platinum group metals in the American Continent shall be promoted through and effected by Sales . . . for the benefit of Impala . . . and (CMI)."

Paragraph 9 "specifically recorded that . . . Sales . . . is obligated to provide (Impala) with certain market intelligence and, at times, technical liaison with its customers in the U.S.A. for which a fee of U.S. $38,000 per annum is currently payable by (Impala)." By paragraph 10 Impala guaranteed to CMI "that for a period of three years after the sale of . . . Sales . . . to (CMI) the profits of . . . Sales . . . after charging all expenses, but before providing for taxation, including the fee of U.S. $38,000 per annum referred to in paragraph 9 above, will not be less in any twelve months' period than U.S. $120,000. Impala . . . further hereby undertakes to make good any shortfall below the above mentioned figure of $120,000 within three months after the close of the twelve months' period. This undertaking shall continue until December 31, 1975 and shall continue thereafter indefinitely unless terminated by twelve months' prior notice." Paragraph 15 "specifically recorded that the present arrangements whereby Impala . . . affords (CMI) 60 days credit on platinum or platinum group metals required for its own purposes shall remain unaltered by this agreement, but no discounts and/or rebates offered by Impala . . . to Sales . . . and/or (CMI) shall be available to both companies in respect of the same consignment of material."

The arrangement between Impala and CMI as evidenced by the Agreement did not work out as the parties apparently hoped. Early in 1975 Impala invoked the termination clauses of the Supply Contracts. On 14 January 1975 it gave Sales notice by registered mail in terms of clause 11 that the platinum Supply Contract and its amendment was terminated as of 31 July 1975. On 21 January it gave Sales notice in like manner and language of the termination of the palladium Supply Contract and its amendment. A copy of each letter was...